THAI coal miner Banpu intends to purchase at least one coal mine near its existing operations in Kalimantan, Indonesia, this year in a bid to save costs and boost earnings growth. The company, which has coal mines in Indonesia, Australia and China, is targeting coal output of 46.1 million tonnes this year, mostly from Indonesia.
Banpu has in recent years diversified into the power business and its chief executive Somruedee Chaimongkol said that it intended to invest US$390 million in 2016, mostly for its Hongsa coal-fired power plant in Laos.
She said the company expected to return to net profit due to rising profits from the 40%-owned Hongsa plant, which was scheduled to be fully operational during March. Banpu posted a net loss of 1.5 billion baht (US$42.06 million) in 2015, hit by weaker coal prices, but expects to book profit of $70 million from the 1800-megawatt Hongsa plant.
Coal contributed about 90% of Banpu’s 2015 sales and 50% of profit, with the rest from the power business, which is expected to generate more cash flow to 30-35% of core earnings this year from 20% in 2015.
The CEO said that coal prices had bottomed out and were expected to recover, adding that global prices had risen to $52 a tonne from an average $49 last year.
In releasing its five year business plan titled ‘Balanced Growth, World-Class Sustainability’, Banpu said it aimed to boost power generating capacity to 4300 megawatts by the end of 2025, of which 20% would be renewables.
Somruedee Chaimongkol said, “Banpu operates on the principle of balanced and sustainable growth in three dimensions: environmental responsibility, social development and economic return. In recent years we have identified and commenced evaluation of a number of renewable energy investments.
“We have concluded investment agreements for solar operations and projects in Japan and aim to secure further opportunities in Japan, China, Thailand and other countries. Banpu’s plans are very much in accordance with the guidelines agreed at the United Nations Climate Change Conference, COP21, and the objectives of energy and fuel diversification.
“For the coal business, Banpu will continue a cost reduction program throughout the value chain with an emphasis on its product development strategy, targeting premium markets such as Japan, Korea and Taiwan. The company will aim to take advantage of low coal asset prices by making synergistic acquisitions which should further drive growth as the coal market recovers."